Posted on 08/25/2015 10:02:17 AM PDT by SeekAndFind
Here's my taxi question. If a person is law-abiding, has a driver's license, has a car or van that has passed safety inspection, and has adequate liability insurance, is there any consumer-oriented reason he should not be able to become a taxicab owner/operator? Put another way: If you wish to hire the services of such a person, what right does a third party have to prevent that exchange?
Many cities have granted monopoly power to taxi companies — the right to prevent entry by others. Sometimes this monopoly takes the form of exclusive government-granted rights to particular individuals to provide taxi services. In other cases, the number of licenses is fixed, and a prospective taxi owner must purchase a license from an existing owner. In New York City, such a license is called a taxi medallion. Individual medallions have sold for as high as $700,000 and corporate medallions as high as $1 million. In other cities — such as Miami, Philadelphia, Chicago and Boston — taxi licenses have sold for anywhere between $300,000 and $700,000. These are prices for a license to own and operate a single vehicle as a taxi.
Where public utility commissions decide who will have the right to go into the taxi business, a prospective entrant must apply for a "certificate of public convenience and necessity." Lawyers for the incumbent taxi owners, most often corporate owners or owner associations, appear at the hearing to argue that there is no necessity or public convenience that would be served by permitting a new entrant. Where medallions are sold, the person must have cash or the credit standing to be able to get a loan from a lender, such as the Medallion Financial Corp., that specializes in taxi medallion purchases. Medallion Financial Corp. has held as much as $520 million in loans for taxi medallions.
So what are the effects of taxi regulation? When a person must make the case for his entry before a public utility commission, who is likelier to win, a single individual with limited resources or incumbent taxi companies with corporate lawyers representing them? I'd put my money on the incumbent taxi companies being able to use the public utility commission to keep the wannabes out.
Who is handicapped in the cases in which one has to purchase a $700,000 medallion in order to own and operate a taxi? If you answered "a person who doesn't have $700,000 lying around or doesn't have the credit to get a loan for $700,000," go to the head of the class.
A natural question is: Who are the people least likely to be able to compete with corporate lawyers or have $700,000 lying around or have good enough credit to get such a loan? They are low- and moderate-income people and minorities. Many own cars and have the means to get into the taxi business and earn between $40,000 and $50,000 annually, but they can't overcome the regulatory hurdle.
Enter Uber and Lyft, two ride-hailing services. Both companies use freelance contractors who provide rides with their own cars. The companies operate mobile applications that allow customers with smartphones to submit trip requests, which are then routed to Uber or Lyft drivers, who provide taxi-like services with their own cars. The legality of these companies has been challenged by taxi companies and politicians who do the bidding of established taxi companies. They allege that the use of drivers who are not licensed to drive taxicabs is unsafe and illegal.
Uber and Lyft drivers like the idea of working when they want to. Some have full-time jobs. Picking up passengers is an easy way to earn extra money. Everyone is happy about the arrangement except existing taxi companies and government officials who do their bidding. Taxi companies retain much of their monopoly because Uber and Lyft are prohibited from cruising. They are also prohibited from picking up passengers at most train stations and airports. But that monopoly may not last much longer. Let's hope not.
A couple weeks ago I used Uber for the first time.
My driver was prompt, courteous and drove a clean late model car. He even had two bottles of water for us to drink, if we so desired.
I’m hooked.
Here in DC, the taxi companies are pointing out the recent series of sexual assaults by “Uber” drivers as the reason to ban them.
I also expect Uber to be sued big time in the near future for not vetting their drivers closely enough.
Uber's recent doings in New York City are a good case in point, to the extent that I'm surprised the author cited NYC to make his case. In NYC, you have a scenario unfolding that defies almost every point raised in this article:
1. If you check out Uber's customer portal for NYC riders, you'll see that for fixed-price routes for the airports, Uber actually charges more than the NYC taxi "monopoly" charges.
2. Uber is now PART of the "monopoly" in New York City ... to the point where Lyft is facing legal challenges from both Uber and the NYC Taxi & Limousine Commission who are trying shut Lyft down.
Personally, I think these companies are only successful in the short term because their business model is built on having access to a huge pool of drivers who have no idea how to properly value the services they provide. As more and more people figure out the game Uber and Lyft are playing, these companies will no longer be competitive in the market.
“...what right does a third party have to prevent that exchange?”
The Marxist Government of the United States routinely MAKES rights not found in the constitution.
Get over it, Comrade.
Pay your Party dues (aka taxes) and shut up.
RE: Here in DC, the taxi companies are pointing out the recent series of sexual assaults by “Uber” drivers as the reason to ban them.
Are these taxi companies telling us that DC NEVER has any instances of taxi drivers who sexually assault their passengers?
I live in NYC. Seriously thinking about making a few extra bucks. I would have to get my TLC renewed though.
The government will get its money from the cost of renewing license.
It would be worth it though.
RE: Personally, I think these companies are only successful in the short term because their business model is built on having access to a huge pool of drivers who have no idea how to properly value the services they provide. As more and more people figure out the game Uber and Lyft are playing, these companies will no longer be competitive in the market.
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Well there ya go... a company’s very existence is predicated upon their ability to offer VALUE for SERVICE to the customers. If they can’t do that, they DIE.
Uber will or should adjust their practice and their business model to compte and if they can’t, we the customers will say buh bye.
So, why should the government interfere with this? Let the free market weed out and kill Uber or anyone like them if they can’t perform. We don’t need the government to do that for us.
I used Uber in Charleston SC. My driver told me that he was an electrician at Boeing and got laid of. He was making more as an Uber driver than he ever made at Boeing.
I would think in NY you could make a pretty good amount of $$.
What is funny is the taxi monopolies will use these hysterics and ignore a very real danger of uber drivers, namely that many do not have commercial insurance on their vehicles. Get injured as a passenger in an improperly insured vehicle and the insurance company has a valid reason not to cover the driver. You are then left with no compensation other than what you can get personally from the driver.
Regardless of any problems with Uber or Lyft, I have yet to hear a legitimate argument for government interference into the taxi market.
Thanks for letting me know that. I dont personally know any drivers, so that helps.
I would suspect that the public interest is served by regulating the number of taxis available in NYC. Also by creating some sort of minimum set of standards.
I’m not sure what a free-for-all would look like, but it probably would be pretty ugly while the forces of supply and demand worked things out.
Download the app and use them a time or two. Having recently used them several times I find they are very open to discussing the whole system.
But, as with anything, be look for opposing opinions. There are at least a couple of sites where Uber and Lyft drivers congregate and you can read some of the not so happy endings.
**I would suspect that the public interest is served by regulating the number of taxis available in NYC. Also by creating some sort of minimum set of standards.**
Please expand.
I did lol. That’s the only reason i’m holding back. You never know if those are just the complainers or they are telling the truth.
I will, however take your recommendation and download the app. Whats the worst that can happen? Lose a week or two driving around? No biggie.
Uber can be more expensive than cabs but they tend to be more available, cleaner, and they take credit cards with no tipping. The entire transaction is electronic from beginning to end. No I can understand you no English you want change for your twenty? I no have change. My credit card reader is broke. No the ac hasn’t worked this week. Do I smell like I no bathed it is such from we’re I’m from.
You raise good points in your post, but it's hard to analyze these issues in the context of pure free market principles when you're dealing with an industry that conducts business almost entirely on public roads.
Sounds a lot like 0bama when uttered the line: You didn't build that business!
A free for all with unlimited taxis in NYC would be ugly for about 2 months before the market sorted it out. Then it would be better, cheaper, more convenient, safer, cleaner and faster for the rest of our lives. Instead we just get ugly we have now forever. God Speed to Uber and Lyft.
Interesting.
I do know Uber hired Obama campaign genius Plouffy to negotiate with DiBlabbo/NYC.
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